With Coal Industry Under Pressure, Some See Long-Term Decline

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Wind turbines and a coal-fired power plant in Hohenhameln, Germany. The rise of cheaper alternatives to coal, like natural gas, wind and solar power, has had a great effect on coal’s fortunes.CreditJulian Stratenschulte/European Pressphoto Agency

Meanwhile, a wave of a half-dozen bankruptcies has hit major coal companies, including Alpha Natural Resources, which sought bankruptcy protection in August. Arch Coal warned last month that a filing could come soon.

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Children carrying coal in baskets in the East Jaintia Hills District of India. Consumption of coal in India is expected to continue to rise, though the country has pledged to expand its use of renewable and nuclear energy.CreditRoberto Schmidt/Agence France-Presse — Getty Images

The rise of cheap alternatives like natural gas, as well as wind and solar power, has had a far greater effect on coal’s fortunes. Plummeting coal prices and business decisions by the companies to take on debt have also weighed down the industry. In addition, campaigns by well-funded activists have helped to reduce the number of coal-burning plants in the United States.

Investors have responded by abandoning coal stocks, and many institutions — including California’s biggest pension plans and Norway’s sovereign wealth fund — have found it easy to drop underperforming coal holdings. The German insurance giant Allianz said last month that it would eliminate coal from its nearly $2 trillion portfolio and would invest heavily in renewable energy sources.

These trends represent good news for the environment, said Tom Sanzillo, director of finance for the Institute for Energy Economics and Financial Analysis, an environmentally focused research group funded by the Rockefeller Family Fund and other philanthropies.

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Despite China’s pledge to cap and then reduce carbon emissions, coal production continues to grow, creating tough choices for those who work in and live near the mines.Published OnNov. 3, 2015CreditImage by Kevin Frayer/Getty Images

“It looks better than it was on the climate issue by reason of market forces,” he said. He co-wrote a report issued recently that suggested that thermal coal, which is used in power generation, peaked globally in 2013 and is expected to decline as much as 4 percent in 2015.

Of course, bankruptcy does not mean the end of a company, said Anthony Yuen, a global energy strategist with Citi Research. “The asset’s still around; the coal is still in the ground,” he said. And so, when a company goes through restructuring, “it might actually clean up their balance sheet,” he added.

Even so, coal is under pressure in many parts of the world, in no small part because numerous countries want to limit the greenhouse gases and smog that coal-burning energy plants produce.

In the United States, the Sierra Club’s “Beyond Coal” campaign has opposed the construction of new coal plants and spurred the retirement of a third of the existing plants. Its new goal: to replace half of the coal “fleet” by 2025.

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The West Open Mine in Fushun, China, is the largest open coal mine in Asia. China, which produced and consumed half the world’s coal from 2012 to 2014, may already have reached its peak in coal consumption.CreditGilles Sabrie for The New York Times

According to the latest global energy outlook from the International Energy Agency, coal use peaked eight years ago among the group of industrialized nations that are members of the Organization for Economic Cooperation and Development. Demand by 2040 is expected to grow less than half a percent per year, compared with 2.4 percent a year over the past 25 years. It should still account for 30 percent of global electricity output by 2040, however.

Even China, which produced and consumed half the world’s coal from 2012 to 2014, may have already reached its peak.

The United States Energy Information Administration reports that China’s coal consumption continues to grow, though the rate of growth has slowed and the country has committed to reductions over time. The Institute for Energy Economics and Financial Analysis, on the other hand, suggested in a recent report that the nation’s coal production, consumption and importation “likely peaked” in 2013, with further declines ahead.

China’s agreement with the Obama administration to reduce its coal consumption is part of a long-range trend of diminishing need for coal, said Mr. Sanzillo, an author of the Chinese coal report.

“Nobody believes these cycles are coming back,” he said. “You’ll have a smaller coal industry, in the United States and all over the world.”

“Coal isn’t going anywhere,” said Benjamin Sporton, chief executive of the World Coal Association. “In our view, coal is going to play a very big role in the world’s energy mix, and is going to continue to do so for many decades to come.”

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A coal mine near Ordos, in the Chinese autonomous region of Inner Mongolia. Coal is under pressure in many parts of the world, in no small part because numerous countries want to limit the greenhouse gases and smog that coal-fueled energy plants produce.CreditMark Schiefelbein/Associated Press

He predicted that improving the efficiency of plants — and developing effective technologies to capture carbon at those plants — would reduce carbon dioxide emissions to more acceptable levels over time.

Michael Levi, a senior fellow for energy and the environment at the Council on Foreign Relations, said, “The idea that coal is done for is financially premature.”

He added: “It’s a lot easier to bankrupt a lot of coal companies than it is to meaningfully reduce the world’s reliance on coal.”

The financial health of the industry should be considered separately from the role of coal in the world economy, he said, and much of Asia will still burn coal because it is relatively cheap. That leaves the situation less than predictable, he said. “I wouldn’t be shocked in 10 years to look back and see that we’ve turned a corner in coal — and I would not be surprised to see a rise,” he added.

Dr. Yuen of Citi Research disagreed. The pressure on coal is “structural,” he said, and related in part to the boom in renewable energy production.

“Probably, we aren’t going back,” he predicted.

He added that, along with North America and Europe’s slowing demand, even Chinese coal demand may already be coming down. And while India will continue to use coal, imports of it might drop as the country improves its own mining capability.

Hal Harvey, chief executive of Energy Innovation, a policy research group, said that even though countries will continue to burn a lot of coal, the broader trend of coal’s decline is clear. “It’s not whether, but when,” he said.

Over time, new technologies for renewable energy will become cheaper and more efficient, he said, in a familiar “virtuous cycle” that creates jobs and builds new industries, leading to further advances.

The deployment of renewable energy has already grown so sharply, he noted, that some American states whose political leaders oppose the Obama administration’s Clean Power Plan might well find themselves in “accidental compliance” as their use of renewable energy reduces the need for burning fossil fuels.

A version of this article appears in print on , on Page A12 of the New York edition with the headline: Some See Long-Term Decline for Battered Coal Industry . Order Reprints | Today’s Paper | Subscribe